What the Oracle of Omaha meant was that when market conditions are easy and favourable, businesses thrive and stock markets rise.
Fueling China’s transition from an export-led economy to one driven by domestic consumption is none other than the free-spending younger generation of Chinese consumers that are growing in size. With rising income, China’s middle-class is growing at an unprecedented pace even beyond the largest cities. The contemporary Chinese consumers are no longer just buying to meet their daily needs. In a big part, higher education has also shaped the way how today’s Chinese consumers spend.
There is an adage that says: “Bull markets do not die of old age but ended by recessions”. As we sit today on 25 October 2018, following the US market’s plunge overnight, the local benchmark Straits Times Index (STI) broke below 3,000 points. Since peaking in April this year, the STI has been trending downwards on weakness. At the current level, STI just needs to shed another three percent to officially enter bear territory.
On 11 September 2018, OUE announced the disposal of the office components of mixed-used development OUE Downtown, comprising two high-rise office towers – 50-storey OUE Downtown 1 and 37-storey OUE Downtown 2 - to OUE Commercial Real Estate Investment Trust (OUECR). To fund this proposed purchase, OUECR intends to undertake a combination of debt financing of $361.6 million as well as rights issue to unitholders at 83 rights units for every 100 units held to raise gross proceeds of $587.5 million.
The bear has bare its fangs on our local stock market. Following the plunge in US equities on Wednesday overnight, local benchmark Straits Times Index (STI) plunged as much as 3 percent to 3,035.2 on Thursday, 11 October 2018. The STI managed to regain some ground to close 2.7 percent in the red at 3,047.
It is almost unquestionable that Singapore boasted one of the most successful economic stories in the last half century. Through our rapid development, our economy has transformed from a fishing hub to one that is now heavily service-oriented. As Singaporeans rose to achieve one of the highest purchasing powers in the world, Singapore naturally became an ideal destination for retailers to set up shops here.
Since late last year, international tourists have been returning to our tiny red dot and arrivals are continuing to grow. According to Singapore Tourism Board, Singapore attracted 9.2 million visitors to our shores in 1H18, up 7.6 percent from a year ago. The hotel sector benefitted from the return of tourists, with hotel room revenue rising nine percent to hit almost $2 billion. Revenue per available room (RevPAR) also recorded almost four percent rise to $187 as a result of higher average room and occupancy rate.
Retail investors often lament that setting up a diversified portfolio with a limited capital base often compromises returns. Indeed, the capital requirement for a diversified portfolio to generate meaningful returns can be substantial and particularly challenging for young investors and retirees who have minimal savings to invest.
Fervent value investors ascribing to Benjamin Graham’s investment philosophy may sometimes find opportunities in stocks stigmatised by the market. Such stocks of companies often trade down to bargain levels due to their involvement in accounting irregularities, financial distress or protracted litigation. An example of such stocks in our local context, Vibrant Group recently plunged almost 50 percent from $0.33 to $0.17 after discovering possible accounting fraud in its BlackGold International subsidiary just a year after acquiring the company.
One of our favourite small-cap developers, Pacific Star Development (PSD) reported its 18M17 earnings today which showed that the group has indeed delivered on all fronts. For the 18-month period, PSD delivered revenue of $121.4 million compared to $59.1 million in FY16. Net profit attributable to shareholders rose 12 percent to $8.4 million, after accounting for dilution from non-controlling interest.